Retail electronics giant Best Buy has been going through some rough times as the company faces increasing pressure from online and discount retailers such as Amazon and Walmart. Best Buy founder Richard Schulze announced about a month ago that he was considering an attempt to take Best Buy private with private equity or possibly selling his 20% stake in the company.

The Best Buy board and Schulze have announced that they have reached an agreement that will permit Schulze to form an investment group and conduct due diligence needed to make a fully financed proposal to acquire Best Buy. The agreement establishes a non-exclusive, orderly process with Schulze and has been filed with the SEC.

The agreement allows Schulze to perform immediate due diligence with access to non-public company information to be shared with advisors and potential private-equity partners. Under the terms of the agreement, Schulze will be allowed to bring forward a fully financed and definitive proposal within 60 days of the beginning of the due diligence period. The due diligence period can also be extended in certain circumstances.

Schulze has also agreed that if his proposal is rejected by the Board of Directors, he will not pursue an acquisition until January 2013. At that time, Schulze will have the opportunity to make a second offer if the original is rejected. The Wall Street Journal reports that Schulze has previously publicly announced that he was proposing a $10 billion buyout of the company he helped found and that his financial partners were "highly confident" that the money to purchase the company could be raised.

Best Buy has also announced that it will offer Schulze two seats on the company's board reflecting the 20% of the company he owns. However, the two seats could be withdrawn if Schulze decides to make a purchase offer directly to shareholders or violates standstill provisions of the agreement.

For things are that are basically commodities, Internet retailers are perfect: computers, DVDs, games and other small to medium packaged products.

For other things B&M still makes sense for the foreseeable future, at least to the majority: cars, clothes, TVs and other things that you really want to see, feel or try before buying.

Taxes is a big part of it. Internet stores should be subject to all sales taxes. The current sales tax policy was an equalizer one upon a time for mail order, but the Internet more than levels the playing field today.

I guess you haven't been to Bestbuy in a while; honestly i can't understand why they even have B&M stores. Each store carries different inventory when you ask a doofus in a blue shirt for something they say check the online store not to mention they are not price competitive to the large retailers like Walmart e.g. pay $30 for a blu-ray at bestbuy or $20-24 at Walmart.

Well, I replied to the post about B&M stores in general; that they still have a specific role.

As for Best Buy, I haven't been in their stores in a while because I buy virtually all of my electronics online (except for TVs). The next time I'm in line to buy a new TV I probably will stop in and see what they have and price compare against other B&M stores. I'm just not comfortable having UPS ship me a 100lb TV. At least the B&M stores get them on pallets with better packing that just one, lone TV in the back of the UPS truck. Maybe that's just being naive on my part though. :)

The other advantage of B&M stores (the biggest IMHO) is rapport and professional advice from the staff. There are a couple local camera and fishing stores which I frequently buy from because if there's something I need and I have absolutely no idea where to start looking, I know they will set me up right. Their staff is knowledgeable and steers me to the right purchase without any upsell or ripoff.

Sure their price is a bit higher than online, but compared to the hours of researching they save me, I gladly pay it. e.g. For my latest reel purchase I was told, "You don't need the more expensive one. It's got a couple extra bearings and some fancier plating, and that's about it. Unless you fish 100 days a year, you're never going to notice the difference." They saved me $80, so I was more than happy to pay $25 higher than online for the reel I did buy.

Unfortunately for stores like Best Buy, they place little value in this sort of good advice and purchase guidance. In fact they've been exploiting people expecting this from a B&M store, by hiring salesmen who know nothing but are really good at acting as if they know what they're talking about while they pitch their upsell. They develop no customer loyalty, and consequently are first on the chopping block as Internet sales pressure B&M stores.